In this article, we will discuss the 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds.
The broad-based market anxiety increased as the US policy uncertainty rose, says Fidelity. The financial markets were weighed down by tariff hikes, deregulation, and tighter immigration policies. The global business cycle is now less synchronized. As per the investment management firm, the US seemed to show mid- and late-cycle dynamics in Q1 2025. Furthermore, the diversification across fixed income and non-US assets is of utmost importance amid growth risks. While the gold and commodities gained, the US dollar decline fueled the non-US equities, says Fidelity.
Amidst US Policy Uncertainty, Diversification Remains Critical
As per Fidelity, the uncertainty regarding the direction of US policy impacted the financial markets during Q1, with investors digesting the news related to executive actions, such as tariff increases, deregulation announcements, reduced government staffing and programs, and tougher immigration activities. Also, the worries related to the economic effects of the tariff increases on the global economy saw an increase during the days after the quarter closed. Despite elevated growth risks, the global expansion was intact as of the close of Q1. Fidelity opines that diversification in fixed income assets and non-US assets is essential.
As per the investment manager, the S&P 500 Index delivered a return of −4.3% for Q1 2025, partly because of the performance of growth stocks (−10%). On the other hand, gold (+19%) and commodities (+8.9%) saw robust gains amid higher market uncertainty.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
Investors’ Approach Amidst Fluctuating Economic Indicators
According to Fidelity, the consumer inflation remained rangebound at ~3% during Q1, which was well above the 2% target of the US Fed. The firm anticipates sticky inflation around 3% for the next year, with upside risk resulting from tariff increases. As per the firm, the consumer inflation expectations have increased to multi-decade highs, making it simpler for businesses to pass the increased costs. Coming to the labor, it has remained tight so far, despite increased policy uncertainty, government layoffs, and federal funding cuts, says Fidelity. On the supply side, the broader labor force participation has stalled below the pre-pandemic rate due to slowing immigration as well as demographic constraints.
As per Marci McGregor, Head of Portfolio Strategy (Chief Investment Office), Merrill and Bank of America Private Bank, the next few months can be a good time to play defense. The investors can consider defensive, dividend-paying, and value-oriented stocks. For the long term, the investors can position themselves for when the uncertainty around trade decreases. The volatility can provide a chance to buy assets supporting the long-term strategy at attractive prices, says McGregor.
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Our Methodology
To list the 10 Cheap Blue Chip Stocks to Buy According to Hedge Funds, we scanned the holdings of the iShares Core S&P 500 ETF and chose companies that trade at a forward P/E of less than ~20.0x. We also mentioned the hedge fund sentiments around each stock, as of Q4 2024. Finally, the stocks were arranged in ascending order of their hedge fund sentiments.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
10 Cheap Blue Chip Stocks to Buy According to Hedge Funds
10. Morgan Stanley (NYSE:MS)
Number of Hedge Fund Holders: 64
Forward P/E as of April 18: ~13.2x
Morgan Stanley (NYSE:MS) is a financial holding company that is engaged in providing various financial products and services to governments, financial institutions, and individuals. The company’s diverse business model, spanning investment banking, trading, wealth management, and investment management, positions it well to reap the benefits of improved market conditions. As and when economic conditions strengthen, Morgan Stanley (NYSE:MS) can see increased activity throughout segments.
While an expected rebound in M&A and IPO activities can fuel strong revenue growth in its investment banking division, the improved market conditions can result in higher trading volumes. Therefore, this diversification enables Morgan Stanley (NYSE:MS) to benefit from various aspects of market improvement. In Q1 2025, the integrated firm managed to deliver a very strong quarter with record net revenues of $17.7 billion and EPS of $2.60.
The Institutional Securities’ strong performance was aided by its Markets business, with Equity posting a record $4.1 billion in revenues. Also, total client assets of $7.7 trillion throughout Wealth and Investment Management were aided by $94 billion in net new assets. Morgan Stanley (NYSE:MS)’s results exhibit consistent execution of its clear strategy to fuel durable growth across its global footprint. Nightview Capital, an investment management company that concentrates exclusively on publicly traded equity strategies, published its Q4 2024 investor letter. Here is what the fund said:
“Finance is transforming. Technology is democratizing access, reshaping wealth management, and enabling entirely new models of investing. From algorithmic trading to digital-first advisory platforms, the sector is evolving rapidly. Investors demand smarter, more sustainable options. The potential is significant, and we are focused on companies shaping how people save, invest, and transact in the years to come.
Morgan Stanley (NYSE:MS): Core Opportunity: Morgan Stanley’s diversified business model supports robust growth across investment banking, wealth management, and investment management.
Key Highlights: Investment Banking Momentum: Revenues rose 55% YoY in Q3 to $1.5 billion, driven by market recovery and large public offerings.
Wealth Management Leadership: Record revenues of $7.2 billion, with total fee-based assets reaching $2.3 trillion.
AI Integration: Cutting-edge partnerships enhance advisor productivity and deepen client relationships.
Investment Case: Morgan Stanley offers a compelling blend of growth and resilience, with strong revenue diversification and a dominant wealth management franchise. Its forward P/E of ~14x suggests attractive valuation upside.”
9. American Express Company (NYSE:AXP)
Number of Hedge Fund Holders: 71
Forward P/E as of April 18: ~16.4x
American Express Company (NYSE:AXP) operates as an integrated payments company. BofA upped the company’s price target to $275 from $274, keeping a “Buy” rating. The firm views its Q1 report as positive. The firm lauded the management’s confidence in the outlook amidst the fluid macro backdrop. American Express Company (NYSE:AXP)’s management plans to focus on managing the company for the long term, exercising disciplined expense management, and making strategic investments in the business.
Elsewhere, William Blair analyst Christopher Kennedy reiterated its bullish stance on American Express Company (NYSE:AXP)’s stock, giving a “Buy” rating. This analyst’s rating is backed by a combination of factors demonstrating the company’s strong financial positioning and growth potential. The analyst opines that American Express Company (NYSE:AXP)’s strategic emphasis on premium consumers, together with its strong underwriting standards and revenue model, places it well to withstand economic challenges. Furthermore, the company demonstrated resilience with stable billed business growth as well as a robust performance in the travel and entertainment sectors, says Kennedy.
Bretton Capital Management, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“American Express Company (NYSE:AXP) was our best performing stock last year, returning 60%, which was on top of 2023’s 29%. Its premium credit cards are more popular than ever, and its moderately affluent customer base continues to spend. American Express did especially well signing up younger cardholders, a great sign that its growth can be sustained for years to come. The combination of healthy revenue growth and tight expense control led to an earnings-per-share growth of 25%.”
8. Verizon Communications Inc. (NYSE:VZ)
Number of Hedge Fund Holders: 74
Forward P/E as of April 18: ~9.1x
Verizon Communications Inc. (NYSE:VZ) is engaged in providing communications, technology, information, and entertainment products and services to consumers, businesses, and governmental entities. Evercore ISI analyst Vijay Jayant upped the company’s stock from “In Line” to “Outperform,” while raising its price target to $48 from $44. The company’s management remains recognized for the effective execution when it comes to improving the postpaid subscriber trends in the Consumer segment, gaining momentum in the Business wireless customers, and meeting the broadband subscriber targets.
As per the analyst, the market is not fully appreciating Verizon Communications Inc. (NYSE:VZ)’s resilient wireless service revenue growth outlook, efforts related to the fiber expansion, and the potential strategic and financial benefits due to the Frontier acquisition. Overall, the analyst believes that wireless companies can continue to perform well, considering the current market uncertainty and downside risks. Verizon Communications Inc. (NYSE:VZ) continues to make investments in lucrative fields, including Internet of Things (IoT) partnerships, 5G infrastructure, and fiber expansion. Third Point Management, a New York-based investment advisor, published its Q3 2024 investor letter. Here is what the fund said:
“While some economic activity has been showing signs of slowing, the defensive composition of the current high yield market with a high mix of higher quality credit and short duration has let the rates tailwind overwhelm such concerns. The lowest quality sectors of the market have performed best, fueled by both soft/no landing expectations, as well as two positive events in the beleaguered telecom space. Telecom/cable have been poor performers year to date due to overhang from the growth of FWA (aka “wireless cable”) and increased fiber building, however the sector re-rated materially on two deals. Second, Verizon Communications Inc. (NYSE:VZ) announced a deal to acquire Frontier Communications (FYBR), a transaction which the fund benefited from by virtue of its investment in FYBR debt. This transaction, aimed at increasing’s VZ fiber footprint, has led to broad revaluation of fiber retail networks that we think is appropriate. While we continue to expect to see FWA rapidly erode non-upgraded cable and especially copper’s share of the low-end broadband market, the VZ deal underscores the value of the higher end footprint.”
7. AT&T Inc. (NYSE:T)
Number of Hedge Fund Holders: 80
Forward P/E as of April 18: ~13.4x
AT&T Inc. (NYSE:T) offers telecommunications and technology services. Raymond James analyst Frank Louthan upped the company’s price objective to $30 from $29, keeping a “Strong Buy” rating. As per the analyst, the firm sees AT&T Inc. (NYSE:T) as a value driver, with wireless growth and FCF ramp expected to bring investors back. Elsewhere, Goldman Sachs reaffirmed a “Buy” rating on the company’s stock. This analyst has highlighted the company’s position as a favorable investment opportunity, mainly in the unpredictable market environment.
Some of the notable factors contributing to such outlook include AT&T Inc. (NYSE:T)’s unique market share gains in the telecommunications sector and the defensive nature of the business. As per the analyst, the healthy dynamics in the wireless market can exceed Street estimates, thanks to the robust subscriber growth and higher pricing. Furthermore, AT&T Inc. (NYSE:T)’s focused fiber strategy can ramp up broadband revenue growth, supporting its expedited network expansion plan. The company’s copper cost reduction initiative can significantly improve its profit margins, says the analyst.
TCW Funds, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“AT&T Inc. (NYSE:T), based in Dallas, TX, is a nationwide provider of voice, video, and data communications services to businesses and consumers in the wired, wireless, and broadband. At initiation, the stock had a $141 billion market capitalization and met all five valuation factors with an above market dividend yield of 5.6%. From a sustainability prism, the company completed its commitment to invest $2 billion by the end of 2023 to help bridge the digital divide. AT&T is working on enabling low-income households to access to low-cost broadband services through its Access service plan as well as reaching out to more rural communities and Tribal lands where internet access remains a challenge. It is nearly 85% the way to providing one million people in need with digital resources through AT&T Connected Learning® with the goal to be reached by the end of 2025. In 2020, the company announced that it is committed to be carbon neutral by 2035 with zero carbon emission across all operations. It is deploying Smart Climate Solutions – through efforts like its Connected Climate Initiative – that will help enable its business customers to reduce their emissions as well. The company’s goal is to help collectively reduce its emissions by one billion metric tons – a gigaton – by 2035, compared to 2018 levels. The primary catalysts are new/strong management and restructuring. John Stankey was appointed CEO in July 2020 and he is committed to refocusing the company and improving its financial performance. The company combined its WarnerMedia operation with Discovery during 1Q:22 which eliminated AT&T’s exposure to the rapidly evolving media industry and refocused its core telecommunication business thus eliminating a major drag on profitability and the company’s balance sheet by reducing long-term debt from a peak $176 billion during 2020 to $142 billion at the end of June 2024 quarter. AT&T is moving aggressively to reduce cost and sell non-core assets such as its advertising platform Xander to Microsoft† which was accomplished during 2022. The company has redesigned its network to be software driven structure reducing the capital investment cycle in its national network – resulting in a network that is flexible with unrivaled speed and reliability – thus enhancing its nationwide position. By the end of 2023, it expanded its 5G network to reach more than 302 million people in nearly 24,500 cities and towns in the U.S. The company’s mid-band 5G+ network alone grew to cover more than 210 million people. AT&T is one of the largest investors in digital infrastructure in the U.S. Over the five years ending 2023, the company invested nearly $150 billion primarily in its wireless, fiber optics, and wireline networks. The extensive restructuring and refocusing of AT&T on its core business should result in improved earnings and cash flow while at the same time reducing uncertainty for shareholders.”
6. Chevron Corporation (NYSE:CVX)
Number of Hedge Fund Holders: 81
Forward P/E as of April 18: ~14.6x
Chevron Corporation (NYSE:CVX) is engaged in integrated energy and chemicals operations. Analyst Roger Read from Wells Fargo reiterated a “Buy” rating on the company’s stock. The analyst’s rating is being supported by the company’s strategic moves, which include the purchase of Hess shares, demonstrating confidence in future growth. Notably, between January and March 2025, Chevron Corporation (NYSE:CVX) purchased 15,380,000 shares of Hess Corporation common stock, implying ~4.99% of the shares of Hess common stock outstanding as of January 31, 2025. Amidst the macroeconomic uncertainties, including tariff disputes and volatile oil prices, Chevron Corporation (NYSE:CVX)’s stable cash flow and capital allocation strategies offer a robust foundation for continued investment, says Read.
As per Morningstar, Chevron Corporation (NYSE:CVX) is well-placed to deliver increased returns and greater FCF due to its oil-leveraged portfolio’s volume growth and margin expansion, improved operations, and cost reductions. The company has started oil and natural gas production from the Ballymore subsea tieback in the deepwater Gulf of America. Ballymore exhibits another step towards Chevron Corporation (NYSE:CVX)’s goal to produce 300,000 net barrels per day of oil equivalent from the Gulf in 2026. Ballymore brings additional production online without building a new standalone offshore platform. This reduces the development costs and can fuel increased returns for shareholders.
5. Cisco Systems, Inc. (NASDAQ:CSCO)
Number of Hedge Fund Holders: 84
Forward P/E as of April 18: ~14.1x
Cisco Systems, Inc. (NASDAQ:CSCO) is engaged in designing, manufacturing, and selling Internet Protocol-based networking and other products related to the communications and IT industry. The company’s strong Q2 2025 results were aided by accelerating customer demand for its technology. With AI becoming more pervasive, Cisco Systems, Inc. (NASDAQ:CSCO) remains well-placed to help its customers scale network infrastructure, increase data capacity requirements, and adopt best-in-class AI security. In Q2 2025, the company’s revenue came in at $14.0 billion, reflecting a rise of 9% YoY, while its non-GAAP EPS rose 8% YoY.
Cisco Systems, Inc. (NASDAQ:CSCO) highlighted that Splunk has been performing in line with the company’s expectations on the top line, and was accretive to Q2 non-GAAP EPS, earlier than planned. Cisco Systems, Inc. (NASDAQ:CSCO)’s focus on AI infrastructure and networking solutions places it well to capitalize on the increased demand for AI-related technologies. The acquisition of Deeper Insights expands Cisco CX’s technology footprint and engineering talent, ramping up innovation and momentum of Cisco’s CX AI capabilities and services. The company’s remaining performance obligations (RPO) sat at $41.3 billion, up 16% in total, and 51% of this amount is expected to be recognized as revenue over the upcoming 12 months.
4. Wells Fargo & Company (NYSE:WFC)
Number of Hedge Fund Holders: 96
Forward P/E as of April 18: ~11.3x
Wells Fargo & Company (NYSE:WFC) is a financial services company that is engaged in providing diversified banking, investment, mortgage, and consumer and commercial finance products and services. Evercore ISI analyst John Pancari has reiterated the bullish stance on the company’s stock, giving a “Buy” rating on April 8. The analyst’s rating is backed by factors demonstrating that Wells Fargo & Company (NYSE:WFC) is well-placed for long-term growth despite the near-term challenges. The analyst is optimistic about the company’s prospects due to its unique drivers that can result in revenue growth and improved returns.
Wells Fargo & Company (NYSE:WFC)’s strategic business investments, active capital deployment, and efficiency improvements can contribute to financial performance. Amidst concerns, its management remains confident in the credit outlook, aided by the resilient consumer and corporate financial health. Wells Fargo & Company (NYSE:WFC)’s extensive branch network and large customer base provide numerous cross-selling opportunities and a source of low-cost deposits. Furthermore, its diverse business mix, which includes healthy positions in retail banking, wealth management, and corporate banking, offers resilience against certain downturns.
Hotchkis & Wiley, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Wells Fargo & Company (NYSE:WFC) is one of the nation’s largest depositories and banks by assets. In addition to having a very high market share of deposits, they also enjoy high market share within the geographies they operate in such as western and southeastern US. In our opinion, WFC is one of the best franchises in banking with a history of very high returns on assets and equity. Performance over the quarter was strong due to potential deregulation with the onboarding of a new presidential regime and speculation that the company’s asset cap could be lifted as early as 1H25.”
3. Oracle Corporation (NYSE:ORCL)
Number of Hedge Fund Holders: 105
Forward P/E as of April 18: ~17.7x
Oracle Corporation (NYSE:ORCL) provides products and services addressing enterprise information technology environments. Morningstar expects annual revenue growth to consistently reach the low teens between fiscal 2026 and 2030, with the adoption of OCI and Oracle Cloud Applications increasing. Furthermore, cloud services and license support are expected to become critical growth drivers for Oracle Corporation (NYSE:ORCL). The firm also expects that the services segment can fare better with low-single-digit revenue growth, with customers relying on Oracle for data infrastructure consulting services.
Morningstar believes that its wide moat is being supported by increased switching costs. Database systems and other enterprise software that Oracle Corporation (NYSE:ORCL) sells remain important for the day-to-day operation of modern enterprises. Furthermore, companies tend to stay with the same vendor for years on the application side and even decades for core systems in a bid to ensure optimal business continuity, opines Morningstar. This is expected to keep Oracle Corporation (NYSE:ORCL)’s return on invested capital above its cost of capital over the upcoming 20 years, given that it is a critical player in such areas.
Artisan Partners, an investment management company, released its Q4 2024 investor letter. Here is what the fund said:
“Notable adds in the quarter included GE Vernova and Oracle Corporation (NYSE:ORCL). We believe Oracle is entering an interesting profit cycle as its faster growing business units become a larger percentage of the revenue mix. Most notably, Oracle Cloud Infrastructure (OCI) has undergone a significant product upgrade cycle that will enable it to be the primary incremental top-line growth driver. The company is winning new accounts due to its attractive pricing, flexibility and expanding geographic availability. Also, within its SaaS segment, we believe the company will benefit from the secular trend toward cloud computing. Oracle experiences a significant profit boost as it moves its lower margin on-premise database business to the cloud (through any cloud provider), which operates at higher margins. The company recently surprised investors by announcing a 2029 revenue target of $104 billion, which implies an acceleration in annual revenue growth to ~16% from the current ~9%–10%levels. Shares pulled back in the quarter, and we used it as a buying opportunity.”
2. The Walt Disney Company (NYSE:DIS)
Number of Hedge Fund Holders: 108
Forward P/E as of April 18: ~15.4x
The Walt Disney Company (NYSE:DIS) operates as an entertainment company. Wolf Research upped the company’s stock to ‘Outperform’ from ‘Peer Perform,’ highlighting durable strengths in its core businesses even during broader worries related to recession. The firm lauded The Walt Disney Company (NYSE:DIS)’s long-term advantages throughout its theme parks, cruise lines, and streaming operations. Analyst Peter Supino of Wolfe Research opines that, in the entertainment business, the company can gain from the measures to restrict the practice of password sharing.
Furthermore, the analyst expects tailwinds from linear TV’s decline and streaming bundles. The analyst opines that The Walt Disney Company (NYSE:DIS)’s experiences business can benefit from launches of new cruise ships as well as updates to its theme parks. The company’s diverse content portfolio, consisting of strong franchises, offers a robust foundation for fueling streaming subscriber growth. Several of The Walt Disney Company (NYSE:DIS)’s franchises have global popularity, aiding international expansion of the streaming services. Therefore, by effectively using its content portfolio throughout the streaming platforms, The Walt Disney Company (NYSE:DIS) possesses the potential to grow its subscriber base, drive engagement, and reduce churn.
ClearBridge Investments, an investment management company, released its Q1 2025 investor letter. Here is what the fund said:
“While we had already begun to shift toward a more defensive positioning entering the quarter, we made a number of adjustments in response to the rapid-fire developments in both economic and political policy. Among our largest new positions during the period was The Walt Disney Company (NYSE:DIS), as we believe that it has turned a corner on building out its streaming service, which should help margins inflect higher and help drive better earnings than the market currently anticipates. The shift in management’s strategy, from “market share growth at all costs” to a more focused approach on improving pricing should also help to improve both profitability and margins, and we believe that there remains meaningful upside compared to other streaming service providers at similar scale.”
1. Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Forward P/E as of April 18: ~17.04x
BofA Securities maintained a “Buy” rating on Alphabet Inc. (NASDAQ:GOOGL)’s stock. The analysts are positive about Google’s recent AI Overviews and its core valuation. They opine that new features are expected to result in increased monetization and more advertising clicks from informational queries. Alphabet Inc. (NASDAQ:GOOGL)’s core search business has been demonstrating resilience and growth. Despite the worries related to the AI disruption, the company’s traditional search business is robust. The company’s AI initiatives go beyond its cloud services. The integration of AI throughout the company’s product suite exhibits its commitment to maintaining a competitive edge in AI technology.
Alphabet Inc. (NASDAQ:GOOGL)’s future growth remains tied to the AI initiatives and the AI integration. Its AI infrastructure investments and research place it well to reap the benefits of elevated demand for AI-powered services and cloud computing. AI advancements can fuel Alphabet Inc. (NASDAQ:GOOGL)’s search algorithms, which can help maintain dominance in the search market and potentially increase ad revenue with the help of more precise targeting and improved user experience. Also, GCP’s emphasis on AI and ML capabilities can bring enterprises that are planning to implement advanced AI solutions, potentially fueling market share gains in the broader cloud sector. As Alphabet Inc. (NASDAQ:GOOGL) has been advancing its AI technologies, GCP can benefit from its early access to cutting-edge AI capabilities.
While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for a deeply undervalued AI stock that is more promising than GOOGL but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.
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